The International Accounting Standards Board is planning to set up networks of regional accounting standard-setters as part of its transition to a post-convergence world, but that is already generating questions about which countries will be in control.

An illuminating article in the Economic Times describes how other countries are running out of patience with the Securities and Exchange Commission’s long-delayed decision on whether to incorporate International Financial Reporting Standards into the U.S. financial reporting system. At a meeting of the G-20 finance ministers last weekend, there was an ultimatum that the Financial Accounting Standards Board and the IASB must finish their convergence work by mid-2013 “at the latest.” That’s actually about two years or so after the original deadline of June 2011 was set by the G-20, so it’s not clear how firm the deadline really is.

At a panel discussion on Tuesday at the American Institute of CPAs’ offices, former FASB chairman Robert Herz and former IASB chairman Sir David Tweedie, who recently became president of the Institute of Chartered Accountants of Scotland, emphasized that the SEC needs to commit to make a decision on IFRS soon (see Former Accounting Board Chairs Urge SEC to Commit to IFRS). Other countries such as Japan, China and India appear to be wavering in their IFRS commitment as well after witnessing the uncertainty in the U.S.

Meanwhile, the IASB and its parent organization, the IFRS Foundation, are preparing to move ahead with the strategy outlined in a February document, which includes setting up networks of regional standard-setters.

The strategy document recommends, “The IFRS Foundation and the IASB should encourage the maintenance of a network of national accounting standard-setting bodies and regional bodies involved with accounting standard-setting as an integral part of the global standard-setting process. In addition to performing functions within their mandates, national accounting standard-setting bodies and regional bodies involved with accounting standard-setting should continue to undertake research, provide guidance on the IASB’s priorities, encourage stakeholder input from their own jurisdiction into the IASB’s due process and identify emerging issues.”

The U.S. is not alone in wanting to maintain its autonomy in setting accounting standards. Questions are already arising over what the shape of these regional accounting bodies will be, and how much autonomy they will have in setting standards that might differ from those in IFRS. There is also the question of whether the U.S. would agree to subsume any of the authority vested in FASB to become part of a regional standard-setting body with, say, Canada and Mexico. That seems unlikely given the work plans that have come out so far from the Securities and Exchange Commission, which appear to indicate that the SEC staff favors an endorsement approach where FASB would be able to decide which IFRS standards would be incorporated into the U.S. financial reporting system.

Other parts of the world also want their own form of autonomy, with some standard-setters in India clamoring to retain their ability to decide on different standards. Meanwhile, in Europe, which was the first part of the world to adopt IFRS, it is unclear if the U.K. and Germany would be willing to allow themselves simply to be represented by a regional grouping like the European Financial Reporting Advisory Group, or insist on retaining their own national standard-setters, especially when the U.S. continues to retain its own FASB.

While the IASB is reluctant to allow so-called “carve-outs,” it may need to accept that some of the regional bodies will have their own ideas about the standards. Theoretically that shouldn’t be a major problem, as we have always been told that IFRS is principles-based and not as proscriptive as a rules-based system like U.S. GAAP. On the other hand, the IASB still wants to have comparability for the financial statements produced in different countries under IFRS. The more divergences there are, the less justification there is for having a single set of global accounting standards. As usual, everybody is going to have their own opinion about what those standards should be, and how they should be applied. We can expect to hear more disagreement over these fundamental issues over time, including how these regional groupings will be organized and how much power they will have in relation to the IASB and the IFRS Foundation.